The mainland's central bank has given permission to big brokerages to issue debt securities after cutting off their main source of funding from banks during this summer's crackdown on stock markets. Three houses - Huaxia Securities, China Guotai Securities, and China Southern Securities - have been approved to issue so-called special financial bonds to raise 500 million yuan (about HK$464.8 million) each. Analysts said the move came after the houses complained to the People's Bank of China (PBOC) - the financial regulators - about difficulty in obtaining credit to expand their capital bases or for working capital, which was threatening day-to-day operations. Until the market crackdown, they had relied on bank financing and the secondary treasury bond repurchase markets for funds. These sources were effectively turned off when banks were banned from extending credit in June. While this succeeded in removing the speculative froth from the markets, it also turned off brokerages' key source of credit. 'Brokerages are crying out for funds. They cannot tap the interbank bond repurchase market and cannot borrow from banks,' Shanghai City United Bank securities analyst Song Huaisong said. Brokerages are expanding and if they do not have legal channels to raise funds, they could turn to illegal sources, which goes against moves to clean up the markets. Analysts said the PBOC was sympathetic to their woes and decided to allow brokerages untainted by the crackdown to proceed with the special bonds. 'There seems to be a certain amount of relaxation for brokerages and this is a good sign,' China Guotai analyst Luo Xu said. The three-year bonds, with a coupon rate of 11 per cent, appear to attract strong institutional interest. China Southern's issue was sold within days as was Huaxia's. China Guotai's issue is open for subscription today. The houses may use net proceeds to finance investment in computers, service their loans and fund underwriting mandates. Analysts said recently punished brokerages - Shenyin & Wanguo, Haitong, J&A - were unlikely to be allowed to make similar issues. The PBOC is also considering applications by big brokerages to raise paid-up capital from one billion yuan to 1.5 billion yuan. 'We have put in an application to ask shareholders to raise the paid-up capital but we still have not heard from the central bank,' Mr Luo said.